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Were Hedge Funds Right About Flocking Into Air Lease Corp (AL) ?

Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Air Lease Corp (NYSE:AL) a healthy stock for your portfolio? The best stock pickers are betting on the stock. The number of bullish hedge fund bets rose by 6 recently. Our calculations also showed that al isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most shareholders, hedge funds are viewed as worthless, outdated financial vehicles of years past. While there are over 8000 funds in operation at the moment, We choose to focus on the elite of this club, around 750 funds. Most estimates calculate that this group of people preside over most of all hedge funds’ total capital, and by keeping an eye on their highest performing equity investments, Insider Monkey has brought to light a few investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Matthew Lindenbaum Basswood Capital

Let’s take a peek at the latest hedge fund action encompassing Air Lease Corp (NYSE:AL).

How have hedgies been trading Air Lease Corp (NYSE:AL)?

Heading into the first quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards AL over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With AL Positions

The largest stake in Air Lease Corp (NYSE:AL) was held by Royce & Associates, which reported holding $92.5 million worth of stock at the end of September. It was followed by Basswood Capital with a $39.7 million position. Other investors bullish on the company included Selz Capital, Citadel Investment Group, and AQR Capital Management.

As aggregate interest increased, some big names were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, created the most valuable position in Air Lease Corp (NYSE:AL). D E Shaw had $5.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Matthew Tewksbury’s Stevens Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s check out hedge fund activity in other stocks similar to Air Lease Corp (NYSE:AL). These stocks are Glacier Bancorp, Inc. (NASDAQ:GBCI), National Beverage Corp. (NASDAQ:FIZZ), Roku, Inc. (NASDAQ:ROKU), and MB Financial, Inc. (NASDAQ:MBFI). All of these stocks’ market caps match AL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GBCI 10 41800 3
FIZZ 21 265029 6
ROKU 26 126428 -5
MBFI 18 190649 5
Average 18.75 155977 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $321 million in AL’s case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Air Lease Corp (NYSE:AL) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on AL, though not to the same extent, as the stock returned 24% and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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